Saturday, September 19, 2009

What should we eliminate in next round of budget cuts?

The Arizona Geological Survey, along with other state agencies, has been instructed to identify programs to permanently eliminate by January to meet another budget cut of 15% - 20%. This latest round is on top of a cumulative set of cuts amounting to about 30% over the past 15 months.

We need your advice and input on what programs will be shut down.

A difference between this round and previous cuts is that we have to identify state-supported programs to eliminate. There are no options for furloughs, salary reductions, or spreading cuts among programs. In addition, the cuts would not take effect until January 2010, halfway through the state fiscal year. So in reality we will have to cut 30-40% for the remainder of the year to meet a year-long target. These are permanent cuts, so it will really be a 30-40% reduction in our funding overall starting in January.

AZGS has weathered the cuts so far by increasing revenues from contracts and grants to subsidize state operations, judicious program reductions, and by not filling vacant positions. However, our fixed costs of rent, insurance, phones, etc have not been reduced and now consume a much larger percentage of the state budget. The administrative workload has not gone down, and in fact, we spend a lot more time dealing with budget cuts and keeping things functioning. As a result, the combined previous cuts of 30% with new cuts of 30-40% mean there could be little left but our fixed infrastructure costs and staff who are funded solely by external contracts and grants.

We are asking our stakeholders, our community of data and service users, and our partners, to let us know what are the most critical functions that we should try to preserve. In the next few days we will be releasing a list of all programs and the budgets assigned to them. We want your evaluation and prioritization of programs, services, products, and data. I'll be blogging, we'll post materials on the AZGS website, and we'll be contacting many of you and your organizations directly.

The Governor's Office of Strategic Planning and Budget, has advised that we can keep a program running if we find non-state funds for it but the current plan is to sweep up a portion of the funds we raise outside as well. We expect that even some non-state funded services that we have kept running will go away as the state takes those funds from us. So, at this time, it appears that we will have even less funds to subsidize state functions than we do now.

4 comments:

I have two questions in regards to this, not that either of them would solve any problems for AZGS, but something the governor and legislature should consider. They both have to do with the state taking monies that were non-state funds from AZGS.

1. If the state takes money from the AZGS store, would that make it financially impossible to create future publications due to the inability to recoup the publishing and selling costs associated with that? If so the state would likely receive so little money from the existing back stock that the cost to the Arizona public would be far greater by preventing AZGS Publications than the state would be making by sucking AZGS funds.

2. Many grants, especially federally funded grants, have stipulations as to what the grant money may be used for. (Typically science grants are not allocated for the purpose of running a state government, for example). How would their decision affect this, and the ability of AZGS to obtain future grants. I know that if I had money to donate I would not provide a grant to an agency where only 80-85% of the grant would be used to further the cause of the grant, and the rest would be stolen by the state government. I would look for another beneficiary who would use the entire grant for its desired purpose.

Chuck, vacating our building will not cut our budget. We looked at this last year - not the whole building but the core repository. The Az. Dept of Administration will continue to charge us the full rent until and unless they find another tenant for the space. They have to cover the cost of the buildings one way or another.

Since most agencies are downsizing as well, there is less need for the space.

We will likely propose to cut our space again and see if they will reduce our rent bill as a result.

Brian, you nailed two of our concerns. By statute, we can sell publications and keep the proceeds to cover the cost of producing new publications and running the bookstore. Take away those funds and we have reduce the number of publications or the services/hours of the store.

On your second point, we are in the midst of analyzing the impacts of transferring 15% of the non-federal contracts we have. These are not block grants or similar. Each contract is for a specific project with required deliverables. We generally bill for actual costs. We do collect an indirect charge from state and local governments (17%) that pays for vehicles, computer support and administrative costs (e.g., accounting, personnel management. If we have to turn over 15% of the contract funds to subsidize other government programs, we are likely not to have enough to complete the contractual deliverables. In that case, we would be in violation of the contract and have to cancel the contract or refund the monies. Either way, there would be big ripple effects.

We are working the numbers now to understand what this means and figure out how to meet the state's levy on us and minimize the number and cost of the projects that would be jeopardized as a result.

At this point, the plans we submit are not going to be automatically imposed by the State. We will provide a write-up of the implications of each proposed cut, so we are hopeful that the domino effect of some of these cuts can somehow avoided.